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China should reduce red tape to ensure the development of a healthy economy, the official Xinhua news agency reported Premier Li Keqiang as saying.

Li also pledged to further cut administrative examinations and approvals, cut the process of establishing businesses and give colleges and scientific research institutes more autonomy, Xinhua said late on Sunday, citing a transcript of a speech Li delivered on May 9.

Li added that a level playing field will be created for private investors, adding that the State Council is mulling detailed measures to promote private investment.

Li said that although China has to some extent streamlined administration, overhauled market regulation and optimized government services, there is still much work to be done.

He cited unfair law enforcement, arbitrary inspections and inadequate supervision as loopholes in market regulation.

The premier said China's traditional international competitiveness has weakened, leading to a decline in growth of foreign trade and use of foreign capital.

"This is associated with changes in our resources, sluggish external demand and business environment," said Li, citing the relocation of some foreign-funded manufacturers from China to other countries.

"We should guide some of them to move from eastern coastal areas to the central, western and northeastern regions," said Li, adding that manufacturing could create jobs and help address China's "great employment pressure".